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FTX: Giant Crypto Exchange Collapses, Files for Bankruptcy

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FTX: Giant Crypto Exchange Collapses, Files for Bankruptcy

(CTN NEWS) – FTX, an embattled cryptocurrency exchange, has filed for bankruptcy in the US, seeking court protection while looking for a way to return users’ money.

According to the corporation, former head Sam Bankman-Fried has retired as CEO.

The 30-year-old, who oversaw the second-largest cryptocurrency exchange in the world, has experienced a dramatic shift in circumstances.

His FTX empire’s demise in less than a week has shaken faith in the already unstable cryptocurrency market.

“I’m really sorry, again, that we ended up here. Hopefully things can find a way to recover,” The “King of Crypto,” Mr. Bankman-Fried, stated on Twitter on Friday

“I was shocked to see things unravel the way they did.”

Before the market collapse, Mr. Bankman-Fried was a prominent figure in the cryptocurrency industry, often compared to business mogul Warren Buffett.

With a Monday net worth estimate of more than $15 billion (£12.8 billion).

However, this week’s early reports that FTX and other businesses owned by Mr. Bankman-Fried were in financial trouble led many users to attempt to withdraw money from FTX, an exchange for buying and selling digital tokens.

Mr. Bankman-Fried attempted to organize a bailout while FTX was in financial trouble.

But his efforts were unsuccessful, leaving the company scrambling to raise billions of dollars and many customers unable to access their money.

The business can carry on by declaring Chapter 11 bankruptcy while reorganising its debts under the watchful eye of the court.

“Begin an orderly process to analyze and monetize assets for the benefit of all worldwide stakeholders,” according to FTX, was the stated objective.

“The FTX Group has important assets that can only be efficiently managed in an organized, cooperative approach.”

According to the new CEO John J Ray III, a lawyer with experience in high-profile bankruptcy cases and a background working at a venture capital firm.

According to the filing, FTX’s assets, liabilities, and number of creditors were between $10 billion and $50 billion.

According to the statement FTX posted on Twitter, the case covers FTX and Alameda Research, a trading company established by Mr. Bankman-Fried, and about 130 associates.

These include FTX’s US activities, which Mr. Bankman-Fried had previously stated were untouched on Thursday.

“This doesn’t necessarily have to mean the end for the companies or their ability to deliver value and finances to their clients in particular, and can be consistent with other ways,” Mr. Bankman-Fried added.

“Ultimately, I believe Mr. Ray and others will contribute to making the finest arrangements’

For the time being, Kingston resident Thomas Culham claimed he cannot withdraw the £2,000 he had invested in FTX. He described this as a “huge blow” because the money was a “good part” of his whole investment portfolio.

FTX: Giant Crypto Exchange Collapses, Files for Bankruptcy

Thomas Culham had £2,000 invested in FTX.

“It’s probably gone now,” the 22-year-old said. “In a few years, I might see some sort of recovery – they do have assets, and they should be able to liquidate them.”

Pressure on Other Firms 

A prominent figure in the cryptocurrency industry and beyond, Mr. Bankman-Fried frequently testified on favour of the industry before regulators.

He contributed significantly to Democrats during the most recent US elections and launched a nationwide advertising campaign, employing celebrities like Tom Brady and Gisele Bundchen to persuade the public that cryptocurrency was a wise investment.

However, as he rose in prominence, concerns about the connections between the various facets of his corporate empire and potential conflicts of interest between FTX and Alameda surfaced.

The problems at his enterprises have damaged the rest of the cryptocurrency market, with tokens like Bitcoin down 20% this week, and put pressure on other businesses to demonstrate that they have the resources to survive.

Following a steep decline in the value of digital assets, several companies in the field had either collapsed or were on the verge of doing so earlier this year. Due to the circumstance, BlockFi, a different cryptocurrency company with connections to FTX, prohibited customers from making withdrawals on Thursday.

“FTX’s demise would be bad for everyone in the sector. Do not consider it a victory for us. User confidence is severely shaken.”, Changpeng Zhao wrote that.

The chief executive of FTX’s larger rival, Binance, had indicated it might buy FTX this week only to back out

Regulators have long expressed concern about the possibility of greater financial instability as traditional financial organizations increase their investments in the market despite a lack of regulation and have warned of hazards to cryptocurrency investors.

Major investment firms like Blackrock, Softbank, and the Ontario Teachers’ Pension Plan in Canada had backed FTX, which is now reportedly the subject of investigations by several financial authorities.

Wedbush Securities analyst Dan Ives asserted that he did not believe that FTX’s issues would lead to broader stock market issues.

“The event is a black swan. There is containment, not any spillover into the market as a whole,” he claimed.

“That’s quite significant and provides another encouraging clue regarding the boundaries between systemic risk and not.”

Mr. Bankman-Fried acknowledged that the failure is “on me,” but that will be of little comfort to the 1.2 million or so FTX customers who may now lose their cryptocurrency savings.

Despite the possibility of losing his money, Mr. Culham declared that this week’s events wouldn’t discourage him from making additional cryptocurrency investments in the future.

“I think there’s a lot of possibilities,” he said, adding that he wasn’t risking more money than he could afford to lose and that he wasn’t sticking to one particular asset class.

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